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Getting Money Back: 4 Investment Expenses That May be Tax Deductible

Posted by WrapManager's Investment Policy Committee
April 23, 2014

If you had a good investment year, perhaps you had to pay a chunk of taxes on capital gains, interest, and dividends earned. Taxes are taxes, but we’re writing to show you a few ways you might be able to get some of that money back.

Here are four investment-related expenses that may be tax deductible for you:

1) Financial Advisor Fees

These can include investment management fees paid to your money managers or financial advisors, and can also include paid-for services like subscriptions to newsletters.

2) IRA Custodial Fees

For annual or maintenance fees associated with holding your IRA at a custodian. One key item to note: these fees may only be tax deductible if you pay them with cash from an account different than your IRA.

3) Investor Tools and Technology

If you pay for an online service to manage your accounts or purchase software to help you track and manage your investments.

4) Financial Advisor Office Visits

Today many people choose non-local financial advisors and money managers, in an effort to seek out quality. If visiting your financial advisor requires airfare or other transportation costs, you may be able to deduct them.1

How Much of Your Investment Expenses Can You Deduct?

The itemized expenses you can deduct are generally limited to anything north of 2% of your Adjusted Gross Income (AGI). Here’s an example of how that works – let’s say your AGI is $150,000. If you take 2% of $150,000, you get $3,000 – meaning you can deduct whatever expenses you have that exceed $3,000. So, if your investment expenses and financial advisor fees amounted to $5,000, you would potentially be able to deduct $2,000.1

Consult a Tax Professional for Advice

Everyone’s financial and tax situation is different, so it is important to seek the counsel of a tax professional to check what investment expenses may or may not be deductible for you. If you need help locating a tax professional or would like to speak with one of our Wealth Managers, you can feel free to give us a call at 1-800-541-7774.


Sources:

1 Charles Schwab


To the extent this presentation includes any federal tax advice, the presentation is not intended or written by WrapManager, Inc. to be used, and cannot be used, for the purpose of avoiding federal tax penalties. WrapManager, Inc. does not advise on any income tax requirements or issues. Use of any information presented by WrapManager, Inc. is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

Tax Planning